ABSTRACT
Since the promulgation of IFRS as a result of the metamorphosis of the International
Accounting Standard Board from the International Accounting Standard Committee in
2001, improved global capital flow and trade were identified as some of the outcomes
from using IFRS for global financial reporting practice. Due to the fact that IFRS includes
more realistic measure of accounting numbers and promotes better disclosure of
accounting transactions, it is adjudged as a better form of financial reporting practice.
Thus it reduces information asymmetry between preparers and users of financial information
and promotes better disclosure and lowers cost of monitoring of subsidiaries and
information barriers to cross border investments and trade. The rising global campaign
for developing countries, including those in Africa, to adopt IFRS, still requires further
examination as to its impact. More so, Africa is confronted by poor institutional framework
and accounting infrastructure, and based on this, the consequent effect of IFRS
adoption on trade and investment require empirical clarification. In essence, three important
questions were asked: (i) to what extent has IFRS adoption enhanced trade flow
of selected African countries? (ii) How has IFRS adoption impacted on the volume of
FDI inflow to selected African countries? (iii) to what extent has the development of the
accounting infrastructure in the selected African countries’ affected the influence of the
adoption of IFRS on trade and FDI inflow. In answering the research questions, a panel
data, consisting of 48 African countries were gathered and for the period 2002 – 2014.
The econometric model were sourced from different database including the World
Bank’s World Development Indicator, the United Nations Conference on Trade and Development
Statistics and the Price Water House Coopers data on the extent of IFRS
adoption around the world. The data were estimated using three approaches: the Ordinary
Least Square regression, the Random Effect approach and the system GMM. The
three estimation methods are deemed important considering their merits and weaknesses;
thus, a multiplicity of methods will help for sensitivity checks. The key results
from the study include that African countries will benefit more from IFRS by improving their institutional framework and more so through the development of accounting infrastructure.
Rapuluchukwu, E (2021). International Financial Reporting Standard, Trade And Foreign Direct Investment In Sub-Sahara African Countries. Afribary. Retrieved from https://tracking.afribary.com/works/international-financial-reporting-standard-trade-and-foreign-direct-investment-in-sub-sahara-african-countries
Rapuluchukwu, EFOBI "International Financial Reporting Standard, Trade And Foreign Direct Investment In Sub-Sahara African Countries" Afribary. Afribary, 20 May. 2021, https://tracking.afribary.com/works/international-financial-reporting-standard-trade-and-foreign-direct-investment-in-sub-sahara-african-countries. Accessed 25 Nov. 2024.
Rapuluchukwu, EFOBI . "International Financial Reporting Standard, Trade And Foreign Direct Investment In Sub-Sahara African Countries". Afribary, Afribary, 20 May. 2021. Web. 25 Nov. 2024. < https://tracking.afribary.com/works/international-financial-reporting-standard-trade-and-foreign-direct-investment-in-sub-sahara-african-countries >.
Rapuluchukwu, EFOBI . "International Financial Reporting Standard, Trade And Foreign Direct Investment In Sub-Sahara African Countries" Afribary (2021). Accessed November 25, 2024. https://tracking.afribary.com/works/international-financial-reporting-standard-trade-and-foreign-direct-investment-in-sub-sahara-african-countries